Thank you to the members of this committee for the invitation to speak today. I wish I could be with you in person.
My name is Steve Susalka, and I'm the chief executive officer of the Association of University Technology Managers, also known as AUTM.
AUTM is a non-profit organization composed of over 3,200 individuals, including some 200 Canadian members who represent more than 300 academic and research institutions worldwide and focus on supporting inventions as they move from the lab to the marketplace.
What exactly is academic technology transfer? That term can be defined in five words: research, invention, evaluation, protection, and commercialization. Using data from AUTM's annual licensing activity surveys, I will compare the technology transfer efforts of Canada and the U.S.
First, on research, academic technology transfer is fully reliant on the money that is spent on research at universities, colleges, and hospitals. According to AUTM's 2015 surveys, the 36 Canadian institutions reported approximately $6.1 billion U.S. in research expenditures. In comparison, the U.S. reported approximately $66.6 billion U.S. Because the U.S. has approximately 11 times the amount of research expenditures that Canada has, I'll divide the U.S. numbers going forward by that multiple—about 11—in order to make a fair comparison.
The next step is invention. Technology transfer activities begin when a scientist, student, or staff person at an academic institution develops an idea for a new invention. Canadian institutions reported 1,813 invention disclosures in 2015. That correlates to approximately $3.4 million U.S. per invention disclosure. For perspective, data from U.S. institutions demonstrate that Canadian institutions spend about 28% more on research expenditures per invention disclosure produced.
The third step is evaluation. Canadian technology transfer offices receive hundreds of these invention disclosures each year; however, not all of them are commercialized. Why? Some inventions might not be protectable enough, and others might not address a substantial market need. Technology transfer offices assess the viability of the various inventions they receive and invest in as many of them as they can afford.
Looking at the number of patent applications filed is a good proxy for the number of invention disclosures actually pursued, recognizing that there are a number of caveats. If you look at the number of new patent applications by research expenditures, you will see that about $5.9 million U.S. in Canada results in one new patent application. Compared to the U.S. rate, Canadian institutions spend about 42% more on research expenditures per new patent application.
The fourth step is protection. The protection of the inventions, generally through patent and/or copyright protection, is a critical piece of the technology transfer process. Without it a company will not take the risk of investing the substantial resources needed to develop an early-stage idea into a product. As this committee no doubt recognizes, a strong and reliable patent system is absolutely crucial for a flourishing technology transfer ecosystem.
The final step is commercialization. Of course, the ultimate goal of academic technology transfer is to create new products and services to help Canadians and serve the public good. Since academic institutions do not sell products, the institution's intellectual property is instead licensed to companies that develop and market the institution's invention.
Canadian institutions reported 700 option and licence agreements in 2015, demonstrating that Canada was just about as efficient in optioning and licensing intellectual property compared to the U.S. when normalizing to research expenditures.
Another result of effective Canadian academic technology transfer practices is the generation of new start-up companies based on academic intellectual property. In 2015, Canadian institutions reported 90 start-up companies formed, again demonstrating that Canada was just about as efficient at forming start-up companies as the U.S., when normalized by research expenditures.
Interestingly, the equivalent option and licence agreement rates do not result in similar licensing revenue when compared to the U.S. In fact, Canadian institutions accounted for only $62 million U.S. in licensing revenue in 2015, which worked out to only about 27% of the normalized U.S. licensing revenue figure. Although licensing revenue numbers are often swamped by a handful of home runs, this difference in licensing revenue is dramatic.
Three points can be made with this data.
First, Canadian technology transfer is about 28% to 42% less efficient in generating invention disclosures in patent applications. Why? One reason could be inventor-owned IP policies are lowering the number of reported inventions and patent applications. They are being created, but just not counted. Also, there might not be as much of an emphasis on intellectual property disclosure and protections as in the U.S. through the Bayh-Dole Act that requires federally funded inventions to be disclosed.
My second point is that Canadian technology transfer is just as efficient in agreements executed and start-up companies formed, even though they start with fewer invention disclosures and patent applications. How? First, this statistic is impressive and reflects well on the quality of the technology transfer professionals in Canada as they are doing more with less. Second, successful Canadian start-up accelerators are likely contributing to the significant number of start-up companies. Third, a focus on IT-based technologies by some institutions are also likely to contribute to more start-ups than expected, due to lower overhead.
My final point is that Canadian technology transfer only produces about 27% of licensing revenue in comparison to the U.S. Why? First, again the inventor-owned intellectual property policy means some inventions, and perhaps some of the higher-value inventions, are not being counted here. Second, downstream funding sources, for example, for institutional prototyping funds or governmental commercialization funds, are perhaps not as prevalent as in the U.S.
I look forward to continuing the discussion as we find ways to further increase the commercialization of the diverse and impressive research being pursued in Canadian institutions.
I am Ken Porter, vice-president for intellectual property management at Innovate Calgary. Innovate Calgary is a non-profit corporation that provides economic development support for entrepreneurs and enterprises in Alberta, and technology transfer services for the University of Calgary.
I am also a board member of the Association of University Technology Managers and immediate past chair of the AUTM Canadian subcommittee, through which hundreds of Canadian technology transfer professionals organize networking, training, and advocacy activities. Of note, directors from across Canada will be meeting in Montreal on June 25, and I invite all committee members to join us there.
The mission of an academic research enterprise is to create and disseminate knowledge. Our mission as technology transfer professionals is to support knowledge creation, for example, by facilitating industry-academia research collaborations, and to support knowledge dissemination via commercialization.
Knowledge and technology created over the course of academic research can be transferred to the public through a variety of mechanisms: publications, meetings and presentations, student employment, consulting, industry-sponsored research, licensing, and start-ups.
Relevant to our discussion today, researcher incentives for disclosure and participation in technology transfer and commercialization are unique to each individual. They may include a desire for a positive impact on society, opportunities for industry partnerships, experiential learning and employment opportunities for students, a sense of personal fulfillment, recognition, and financial rewards.
Conversely, there is a variety of reasons why researchers may not choose to disclose IP. They may consider it a distraction, an impediment to scholarship, a source of financial or personal risk, irrelevant to their academic careers, or unlikely to yield any useful outcomes. They may be unaware of the benefits of disclosing IP, or of institutional policy obligations to do so. It also takes time and effort.
Government, academic institutions, and technology transfer professionals can support and encourage researcher participation with time, such as entrepreneurial leave and teaching load reductions, recognition for patent and commercialization activities, funds for research and partnerships, and education.
Universities rely on technology transfer professionals to provide education through outreach, presentations, and workshops. However, Canadian professionals are often stretched to provide essential services, such as patent prosecution, marketing, licensing, and start-up creation, thereby reducing opportunities for outreach. From 1995 until 2009, universities were funded by the tri-council's intellectual property mobility program, which directly supported staff. Since IPM's discontinuation in 2009, however, staffing levels have declined, which has impacted researcher education.
Funds for research and partnership have also been reduced. The popular CIHR proof of principle grants, which directly supported knowledge mobilization, were discontinued in 2016. In addition to bringing back the IPM and POP programs, Canada could enhance academic innovation through programs such as the U.S. SBIR and STTR programs, both of which leverage university IP and research capabilities.
An example of a current Canadian funding and collaborative research program, funded by Western Economic Diversification, is the Western Canadian Innovation Offices consortium, which incorporates features of both the IPM and POP programs.
WCIO connects western Canadian industry needs with the research and innovation resources at WCIO's 40-member consortium of universities, colleges, and polytechnics. The goal is to improve engagement between industry and academia and address industry-driven innovation challenges. The current pilot program supports the energy sector. To date, WCIO has funded seven technology development projects, leveraging $1 million in funding to attract over $5 million in research investments from industry. The seven projects involve partners from 10 universities, one college, three polytechnics, and 12 companies.
In addition to project funding, WCIO supports eight business development professionals who lead WCIO's outreach activities. The BD professionals learn academic capabilities and match them to industry opportunities for collaboration.
An important objective for WCIO is to involve polytechnics in innovative research projects. Polytechnic facilities, used for prototyping and fabrication, are well suited to supporting WCIO projects, and the faculty and students are highly motivated. A student recently said that, as a machinist, being involved in innovation made him feel like a superhero.
At a recent WCIO showcase, I moderated a panel and asked the industry representative how their project would be affected if there were no WCIO. He simply replied that without WCIO, there would be no project. Clearly, incorporating polytechnics into research projects such as WCIO is crucial for the Canadian innovation ecosystem.
WCIO makes no claim on IP ownership, which is instead decided on a case-by-case basis by the collaborators. Such flexibility of IP approaches is a strength of the Canadian system. The degree of control over IP that an institution requires depends on the nature of the work, the scientific field, and how the contract fits with a particular research program. In most cases, IP rights granted to a sponsor are sufficient for commercialization without inhibiting the future project of an academic research program.
IP policies in general reflect the nature of research at an institution, the campus culture, and the infrastructure available to mobilize commercialization. Institutions with medical schools can often invest years of patent and clinical development into a therapeutic agent or medical device and may be better served by an institution-owned IP policy. Conversely, institutions without significant medical research are in a far better position to embrace a creator-owned IP policy, where speed to market drives innovation for fields such as IT and software innovations.
It's important to recognize that intellectual property extends beyond patents and includes copyrights and trademarks that provide opportunities for knowledge mobilization beyond the STEM fields. The Canadian profession, through organizations such as Research Impact Canada, has made great strides towards disseminating innovations from non-STEM faculties, including the social and clinical sciences, education, architecture, and the humanities. Such faculty members are often unaware of the value of their innovations and of the possibility of disseminating knowledge through non-academic channels.
Innovate Calgary hosts events to showcase their work, creating an open forum for dialogue among faculty members. Most recently, an event held in partnership with the Werklund School of Education attracted over 60 researchers, and attendees extended the conversation to nearly five hours. Researchers presented innovations from a variety of disciplines, including psychology, business, kinesiology, social work, women's studies, and education. One researcher expressed that he was starting to understand that commercialization wasn't all about the money, that it was also about scaling impact.
Thank you for inviting me here today, and I look forward to our discussion.
Thank you, Chair and esteemed members of the committee, for the privilege of appearing as a witness before you.
I'm an IP lawyer and patent and trademark agent with Bereskin & Parr, and an assistant professor at Western University. I also advise the executive of the Council of Canadian Innovators. I work almost exclusively with Canadian companies to help them benefit from their technology through intellectual property.
I've researched and written in this space with the Centre for International Governance Innovation and the Centre for Digital Entrepreneurship and Economic Performance.
I will first identify where there are limitations with Canadian tech transfer and IP and finish by presenting constructive opportunities to move forward.
Should Canadian universities and research institutions drive innovation, fostering Canadian companies that own and benefit from Canadian-developed technology or should they only invent and educate, create world-leading technologies, and allow others to commercialize and reap the economic benefits of these technologies? If we want our publicly funded research institutions to be champions of innovation, we currently have problems. The technology is suboptimally protected, and even where protected, the technology is being given away.
Our academic institutions are not patenting at the same rate as their foreign counterparts, as we just heard. This is particularly relevant in the clean technology space. On average, Americans are patenting 2.3 times more per academic publication than Canada. China is patenting at a rate almost 15 times more per academic publication than Canada. We have not been keeping up with our international competitors to capture the value of our technology through international IP systems.
If there's no patent and the invention becomes public, then there is nothing to prevent someone from practising the invention. It's not only that we don't protect, but we also allow the technology that we have protected to be raided by foreign firms. In particular, IP benefits from public-private partnerships are flowing out of the country. To commercialize research, publicly funded institutions currently partner with industry players. Many agreements end up with newly developed intellectual property wholly owned by the industry partner, or licensed, because they have the vision to harness and capture the value of the IP. These industry partners are very often foreign companies, leading to critical IP leakage out of the country.
What's worse is when a Canadian company is looking to develop similar technology, the foreign tech can prevent that Canadian company from practising that technology, or force them to take a licence. We are essentially encouraging a system whereby Canadian companies must then license back Canadian taxpayer-funded IP from the big foreign technology competitors. Instead of reinvesting in Canadian R and D, Canadian companies are paying IP royalty fees.
How bad is the outflow of IP ownership? We've done some research on the invention and ownership in the artificial intelligence machine learning space, and more than half of Canadian-developed IP is now owned by foreign companies. This is not an isolated issue. Of all Canadian invented patents issued last year, 58% are now owned by foreign companies. This is up from 45% a decade ago. The trend is getting worse.
This means that Canadians are doing the hard work to create great technologies, but we are not able to benefit from them. This further prevents us from being able to reinvest in new technologies and new industries. If we are embarking on Canada's innovation age, we must prevent the IP from being raided by foreign firms and instead capture the resultant wealth and associated economic benefits so we can create successful and globally competitive companies that rival the world's best.
How do we do this? Education and increased sophistication for Canadian innovators is a start. Ultimately, we need to generate more IP and ensure that IP that is generated in Canada with taxpayer funding is available to Canadian innovators. Traditionally, policy-makers are focused on domestic IP rules. The problem with that approach is that most Canadian innovators don't secure Canadian patents because the market is just not big enough, so changing our domestic rules will have little impact for Canadian innovators.
We have to find mechanisms to help Canadian innovators compete in global marketplaces where the large commercialization opportunities lie. That means playing by the IP rules of foreign countries. IP exposure reduction measures, such as the strategically designed patent collective or sovereign patent fund is one solution we have studied that would help deal with the challenges facing Canada's innovation ecosystem.
As the data shows, we don't own the existing IP in many industry sectors, so our firms do not have the freedom to operate in those markets. The strategy is to acquire and bundle foundational patents, international patents, in a manner that provides Canadian innovators with market access opportunities. Instead of having to take licences individually when companies have the most to lose, the collective approach allows Canadian companies to have improved freedom to operate internationally.
Still further, many of the foundational patents developed by our public institutions can form part of the pool, providing Canadian firms with the freedom to operate under university-generated IP.
This improved freedom to operate ensures that Canadian companies are able to have a strong position when entering global markets and ensures that taxpayer investments are not flowing out via royalty payments to the owners of foundational patents.
Our taxpayers expect more from their investment—that the benefits flowing from the technology and the IP provide the expected taxpayer return. We have to ensure that the IP strategy for technology transfer has a focus on national public benefit.
Imagine having to tell a promising Canadian technology company which is trying to scale up, find markets, and increase profits that the government has just given its biggest established technology rival, foreign technology rival, access to Canadian university research. If the Canadian firms are not able to compete with the foreign technology firms for Canadian-developed technology, the funding research in Canada looks a lot like a subsidy for the development of foreign technology firms' IP. This not only wastes a lot of money but also disadvantages Canadian technology companies and our future prosperity.
In this innovation age, we can't treat IP as we do our natural resources, by selling it off early. The value in IP is speculative value, so selling early doesn't allow for that big upside. As Ben Bergen, executive director of CCI said, “The countries that have IP are wealthy, and the countries that lack it are seeing their prosperity erode.”
Thank you very much, Mr. Chair, and to all of our guests.
Stephen, it was nice to have an opportunity to see you. Unfortunately, our technology doesn't seem to be finding its way seamlessly across the border right now.
I know some of the things you talked about with regard to the dollars invested in research in Canada and the U.S., when you take a look at the relationship of size, there are a lot of efficiencies and a lot of things we do well, but the key thing you spoke of is the tech transfer only getting 27% of the bang for its buck as it does in the U.S.
I spoke a couple days ago with a venture capitalist. Basically, what they were saying is that when you look at what happens in the U.S. and the way in which they court investors, and the way it is done in Canada.... You'll go down there and they're going to take you to the football game. They're going to show you the whole place. They're going to show you the town. If you come to Canada and you want to talk to researchers, they're going to take you into some office and give you a slide show, and that's going to be the relationship. I think it might have been exaggerated a little, but I think that's part of it. When they're wooing people with dollars to invest, it's a good job that is done by universities.
I don't know if that ties into part of this, or why it is you can get people who are a little more aggressive in their investments to go into some of those areas.
I do appreciate the opportunity to see you again. Our trip to Washington certainly helped us a lot to understand that.
I wonder if you could quickly talk about that Canadian tech transfer, and what you see as maybe one of the key components that we should look at.
There are two parts there, so I'll go back just a bit to the WCIO and the matchmaking that we do between academic capabilities and industry needs. Regarding the illustration you provided with the football games in the U.S., this kind of work is a contact sport, and it's a person-to-person sport.
When we first started thinking about WCIO, we thought we would go to academic institutions and provide a list of the strength of the research enterprise, go to industry and ask what their needs were, put that in a database, and everybody would find each other. That didn't work at all. What did work was hiring these eight people from Winnipeg to Vancouver who learned the capabilities and the needs in their region. They also speak to each other on the phone once a week so that they can share this information across provinces and then put the opportunities and the capabilities together. It took that level of involvement to get our seven projects. It's really slow, meticulous, and painstaking work. That's that part of it.
As for copyrights and trademarks, we haven't expanded to the polytechnics yet. Polytechnics are a critical component to the industry-academic relationship with respect to prototyping, fabrication, and all the wonderful things that they offer, which is unique to Canada over the U.S., and a strength that Canada has over the U.S. as far as the comparable community colleges that the U.S. would have are concerned, which are not to the degree that we have at our polytechnics here.
With respect to copyrights and trademarks, that is a new effort. It started about three years ago in Calgary, and I think it's spreading across Canada. York University is a leader there. David Phipps has organized Research Impact Canada. It is an opportunity and a campaign to let folks across a university know there are opportunities for them to play in this arena, in intellectual property, by partnering with industry in ways to expand the reach of their research beyond publication and presentation. Now I know all 13 deans on our campus, not just in science, engineering, and medicine, which is with whom I would have worked exclusively five years ago.
We were very fortunate in Calgary. We have a wonderful example of a social enterprise. In disclosures through technologies that we get, 95% of the time we have a licence to an existing company, and they would have the infrastructure to commercialize a particular invention, and 5% would go to start-up companies where all the infrastructure has to be created. In the social sciences and the clinical sciences, there's nobody to take your idea forward except for you, and so the reverse happens, and for 95% of social innovations, you have to form your own company if you want to spread it through the marketplace.
We have a great example of that at the University of Calgary. It's a program called LivingWorks. It's an approach to suicide prevention. It was developed over 15 years of academic research in the 1970s and 1980s. They became known as world leaders in suicide prevention but exhausted their ability to disseminate their program through academic channels. They knew there was a demand worldwide, and if they wanted to meet that demand, they had to do it through the private sector, so they formed a company in 1990 and are still operating. They have about three dozen employees in Calgary. They have tens of millions in revenue. They deliver their program 150,000 times a year. They have headquarters in Australia, North Carolina, and Calgary. Just last year they sold their company.
That's a tremendous example of using the private sector to expand the impact of that program.
Thank you, gentlemen, for being here.
It's an interesting process we've gone through to get here.
I represent Windsor West, which is the automotive capital of Canada, across from Detroit, Michigan. We have very much integrated economies with the United States. What's interesting is that one of the reasons we have the auto sector is that we were bicycle manufacturers. When Henry Ford built the car, they looked for people who could weld, understood gears, and so forth. That's where the automotive industry became proficient. Detroit and that area is also now becoming a cycling industry again, as well as maintaining auto.
The point I'm getting at is that for innovation and for the investment we make as taxpayers through subsidization of education, subsidization of grants, subsidization of, even later on, tax incentives such as our SR and ED tax credits, and so forth, there is the eternal frustration at the end of the day, in a riding such as mine where tool and die and mould making, for example, is the best in the world, of eventually having to end up being a fixer of Canadian technology that has now been transplanted to China, or even to South Korea, versus the products that we actually could have been manufacturing at home.
Mr. Hinton, I'll let you start with regard to this issue. For me, at the end of the day, I want the manufacturing jobs to be part of the process. I believe that also is where further innovation takes place. I don't think it all takes place on a computer screen; it also takes place on the shop floor, where people are actually hands on, doing the work with the product and finding different ways to use it. My eternal frustration is doing the front-loading of it, and then it isn't transferred to good, sustainable jobs in which Canadians have made their own personal financial investments by going to college or university.
With that, we've undermined even some of our own Canadian innovation by subsidizing products that are manufactured elsewhere, which then compete against Canadian products that were doing quite fine in the market.
Do you have any suggestions on how we get around this and how we perhaps do more enforcement with regard to our expectations? We signed treaties about IP, intellectual property rights, with countries that regularly abuse those things, and we're pressured to do more. Canada is seen as an outlier in many respects; meanwhile, some of those countries in the world habitually have industries with state government support, either direct or indirect, and non-tariff barriers that make it even more complicated for Canadians who just want to make a better widget and produce it in their own community.
Thank you for that comment. Actually, before I got into law, I worked for heavy truck manufacturing in Woodstock, Ontario. We made parts for heavy trucks, for International Truck and Engine, in Chatham, which is no longer there, and Stirling, in St. Thomas, where the same sort of thing has happened. I worked on the shop floor as an engineer. I understand that these are great jobs.
The focus we need to have is this. Jobs are the success story of having great technology be ours. We don't own this intellectual property. We have a very small fraction of the freedom to operate. If you don't have the IP, you don't have the freedom to operate and so you're subject to the international players that have this IP. You don't have the control and you don't have the opportunity to keep the jobs where you want them. The recent report that I was referencing said that 58% of IP that's generated in Canada is now foreign owned.
This is what we do. We are creating all these great ideas, but because we don't own them, we don't have the opportunity to exploit them, control them, keep them in Canada to benefit...and to keep refuelling those jobs in future R and D. We don't have this freedom to operate. We don't have the IP. It's a constant struggle and we're just reinvesting in the end game of getting more jobs. What I would like to see more focus on is keeping the ownership of the technology, the IP that we're creating, and then we'll be able to keep refuelling with those manufacturing jobs as well. That's the first point.
The second point is that when we're getting into these trade agreements—you're thinking about NAFTA, you're thinking about TPP that's coming on again, and you're thinking about the China agreement that's being negotiated now, and CETA that's come along in the past—a lot of that is focused on our Canadian domestic IP rules.
As I said in my remarks, the Canadian IP rules are almost insignificant to Canadian companies. We're sitting here fighting about an insurance policy on a house that we don't own. We don't have any property and we're tweaking these things. Maybe there's a balance between the innovators and the users in Canada, but that's not helping Canadian innovators. Canadian innovators have to play by the international rules.
What do we do when we're going into those places? How can we get a better leg up when Canadians are trying to commercialize globally so we can retain the ownership for Canadian companies? That's one thing we've researched in the patent collective. You collect the critical mass of IP, patents. You create freedom to operate, buy up U.S. patents, and license them so the members are not subject to those patents. They have the freedom to operate under those patents as a collective. The collective will be able to benefit and won't have to take licences individually. They will have that freedom to operate, to go into the U.S. markets and exploit the technology there, and then bring that value back into Canada and refuel those jobs that you mentioned earlier.
Sure. There are two points I want to make on the Bayh-Dole Act.
Number one, as it relates to your question, if an invention is funded by the federal government in whole or in part, it is required to report that invention to the federal government. Just to be clear, that would not include inventions that were funded by non-federal sources at all, and again, it's in whole or in part, so even if it were partially funded by the federal government, it would be reported.
In the U.S. this captures the large majority, as in the United States, federal government funding accounts for 60% to 67% of research expenditures, I believe. In Canada, it's closer to 40%, but still you'll capture a great amount of that.
The other point I want to make—and maybe this is just a callback to an earlier conversation on the Bayh-Dole Act—is that one of the other requirements we have is a requirement to substantially manufacture an invention, again, funded in whole or in part by the federal government, in the United States. There is potentially an option like that for Canadian federal or provincial funding.
You're right. We do collect all sorts of data. There are two or perhaps three interesting data points to back up the importance of that fund and the absence of it affecting Canadian transfer in a negative way.
Number one, in 2003, licensing revenue by the Canadian institutions was $72 million. For perspective, it's $62 million now, 14 years later. It peaked in 2003, and then it dropped.
Another really important point, and Mr. Porter touched on this, is that funding allowed for continued education of faculty members. It should come as no surprise that a peak in invention disclosures.... If you look at it in five-year intervals, in 2009 there were 1,921 invention disclosures, so [Technical difficulty—Editor] closer to 1,800. You can see that we had a peak and now we have a drop-off.
The third statistic I wanted to point out [Technical difficulty—Editor] start-up companies. In 2003, there were 58 start-up companies, and that dropped to 48 in 2009, so we had a significant drop-off, perhaps with the lack of manpower in those offices.
I just wanted to give you some statistics.
To the first question, there was an organization that existed from the 1930s until 1992 in Canada, called Canadian Patent Development Limited. There's one paper on it, if you want to see a coordinated approach on what happened to it. It was axed in the early 1990s.
I'll give you two stats. Apple and Google spend more on patents than they do on R and D. We're being woefully outplayed if we think that we can have a couple of tech transfer officers here and there and compete at this level. IBM got more patents last year than the entire country of Canada. We're being woefully outplayed. We're not capturing the IP. We have great technology, but we're just giving it away. Those are my stats.
What can we do about it? IP education is a start. I work at Communitech. I'm there every week, and I give out pro bono IP law clinic work. If a student from UW wants to talk about IP, I'm happy to give away my time. Getting the profession out and being more active at the hands-on ground level, professing, giving away this IP knowledge, and getting it in there, that's the base level.
Then, internationally, we need mechanisms that are going to enable Canadian companies to compete globally. This includes litigation support. If Canadian companies get into international IP litigation and they're being dragged down to east Texas to defend against a non-practising entity or patent troll, they need to have the sophistication, which is not available in Canada, to manage and navigate these systems. Defensively, we have great technology. Use this technology. Use the IP that comes from it to be defensive in a licensing way, if you're sued, in a countersuit.
Mr. Chair, I think it is the role of the committee because the Investment Canada Act falls within our purview, I first raised non-democratic governments having the ability to purchase Canadian companies. That was done through the sale of Petro Canada when the Chinese government was purchasing Canadian shares in Canadian oil companies. Ironically, it wasn't seen as proper for Canadians to own their own oil in this country. China Minmetals Corporation was the catalyst for a review of that. This committee played a role in that. That's why part of the Investment Canada Act has that qualification under national security interests.
I think a meeting on this is fine. It's appropriate. Certain things can or can't be disclosed. The threshold has been dropped over the years as well. This committee has studied the Investment Canada Act several times.
It does lead to further discussion on whether we need to review it. The last time there was any discussion was during a omnibus budget bill, so if you go back to this committee's role in the past, not only was it raised under the Investment Canada Act, but later on when the Investment Canada Act was worked on, it was done as separate legislation.
In subsequent governments, both Liberals and Conservatives had the Investment Canada Act as part of their budget bills, so this committee has not vetted it since it was altered. I would be interested in a meeting on this just to find out how much more that process played itself out. I think that's our role as committee members, because the act has been changed a number of times without the committee hearing from any witnesses. It's like a review process. I don't see anything nefarious. It would be a good probe for us to find out whether there is an interest to look at the Investment Canada Act, given the threshold has dropped, the national security....
We have other issues too, and I'll summarize. An example would be private equity firms. We don't know who owns or has invested in them. They could be kingdoms. They could be other types of investors. We have no idea who's buying Canadian companies.
We have questions about some Montreal companies that have been bought. We have a series of things. This one stands out because it's gone through this current process, and I think it would be worth at least dipping our toes into it to find out how things are going by the way the act was changed, and it was changed without this committee's review. It was changed in a budget bill, so we don't know the mechanisms, and whether they're working or not.
I think those are the facts. I'd like to see if it's working for Canadians. It would be rather interesting because this committee...and I'm not trying to be overly political on this, but it's practically a reality. When we go to omnibus bills that include other legislation, it takes away the committee review and the full independence of the review of that issue. It takes away from business and public representation, from all those who would provide testimony and come back to us, as they would on any other bill. The repercussions are all that goes to Finance.
Inadvertently, we have ceded ground to the finance committee that does a pretty cursory flyover of issues in a bill, as opposed to doing the good scrutiny of legislation that committees used to do.
For that reason, it's worth at least a meeting to look at this, and I would move the motion at the appropriate time to have a vote on it. Let's be done with it. We won't be able to get to certain things because agreements have to be signed. That's the law, and that's fine, but at least we'll get enough information to know whether we need to do more work or no work.
Mr. Chair, I think a lot of good discussion is taking place on this, and it all started and stems from the fact that questions had been asked and answers weren't being received. This was a major public concern in the discussions that took place, and it was as though the government had no intention of being forthcoming with the discussions.
We understand the concept of secrecy and that type of thing and we've been engaged in it as well, but we've also seen situations in which companies have been refused because of the structure of the government investment from outside countries.
I think it's important, if we go back to what the motion says—that's what we're talking about, making sure that we're staying on task here: looking at the review of the Retirement Concepts acquisition by Anbang Insurance—that this was in the public realm for quite some time. No one seemed to be getting the answers they required, and this is at least one of the reasons we're talking about it today.
We also talked about the Investment Canada Act threshold. When we're looking at it and are trying to make comparisons, I think to talk about the two together becomes useful.
We have to recognize what is going to take place, because industry is going to have a role. When we deal with TPP it's going to have a role, and a continuous role as we're dealing with CETA, and of course it's going to have a role when we're taking a look at NAFTA. All of these things we have to be aware of, and if the Investment Canada Act is something in which people don't have the confidence they require, I think this would be a great way to flesh it out with something that people actually understand, because of the concern that was presented earlier on.
I think I may have a compromise amendment that might get to...and I'll ask that you see whether they'll review this.
I get what everybody is saying here. There are good points on all sides, but I would suggest that, for example....
I'll read it and I'll read it again a next time, just so that you get the idea. I struck out the middle part of the amendment and put “that the committee consider undertaking a review of the Investment Canada Act, including a departmental public briefing and reply from the minister”.
Let me speak to the reason. I'll be very quick in speaking to it. It is that then we actually get a review of the overall thing—and there are a couple of others that I wouldn't mind getting getting a little more information on—and then we get a reply from the minister to the committee, and then we all get a good update, with just a couple of meetings to start with, on whether or not there is more work to be done. We get all of those things accomplished together. It takes a couple of meetings, and then the committee at that time can decide where to go from there.
In this way there is no singling out, such as the Liberals are concerned about. The Conservatives have a particular one here, and I have that one, but also there are a couple of others, the telco sector, and so forth, that are leading to other stuff.
Again, I think we get a good public briefing from the departmental side and from there we see whether the minister is available to go from there. I think that would wrap things up nicely, and then we will be able to decide whether there is further interest.
I'd ask that this be treated as friendly, and if we're good with that, I'm ready to move the motion with the amendment when appropriate.
Lloyd's logic is completely wrong.
I was on the veterans affairs committee for many years. The Liberals were in opposition. I can remember when Peter Stoffer was in opposition and all they did was question the decisions that public servants had made, and I was along with him questioning the decisions they had made. We're just talking about a different department and the decisions they make. That is your job as a member of Parliament, in my opinion.
Yes, I agree that they can't tell us all the details and dotted lines to all the different companies, because that would be under their non-disclosure agreement. However, we can question the officials on how they are satisfied with their decisions on whether or not this is a state-owned enterprise and on how the department ascertains that. That is completely within our realm as committee members, and they're not giving away any secrets about how they do that.
The other thing that's interesting is the question how it is that this company has basically backed off any acquisitions in the United States but was able to conclude one here in Canada. Again we can't get the specifics, but maybe the department can help us understand how they look at this.
I'm quite happy with Brian's amendment. It's fine. We're trying to deal with a serious issue, which is companies that try to maintain that they're a private company or whatever they want to describe themselves as, but quite likely, when you look at all the dotted lines, are owned in part by the Chinese government.
The vulnerability this leaves us with is that when the banks—whether it's the government or a bank that's run by the government, however the enterprise is set up—decide they need their money back, they want their money back. We've seen examples of that in the United States as well, in which the Chinese want their money back. I think they're having to go to get money from Russia or other countries; I don't know where they're getting their financing from.
These are the problems, and especially in this case we cannot leave people who are in nursing homes high and dry because China decides they can deploy their capital somewhere else and get a better rate of return. When we're talking about health care and about some very murky ownership structures, that is the job of this committee. I'll leave it at that.
I accept Brian's amendment, because it's trying to accomplish what we're trying to do, and yes, this is a more generic way of going at it. I'll leave it at that.
I have things to say about it, but I'm not going to discuss it. I'm not comfortable. I'm just not comfortable.
I think I agree with what you're driving at, Brian. I like the idea. It's not something that I came, quite frankly....
Before I say, “Okay, let's just call a vote”, I'd like to think about it and reflect on it. You've made a good suggestion. There are things I'd like to share with you, but I'd also like to reflect on it first. You've made a suggestion to change this.
The way it stands right now, I was against this motion for exactly the reasons that Lloyd pointed out. I don't think it's our business, as overseers, to go into the nitty-gritty. If they follow the rules and we don't like the outcome, it's our job to look at the rules, but it's not our job to say, “Did you follow the rules?” We have to take, as overseers, that they're following the rules. If you're concerned that they haven't followed the rules, that's a different kind of conversation.
If you're concerned that the rules aren't right or the rules haven't been looked at, that's something I'm more open to doing. That's actually our role. We're not here to micromanage the process.
I came in here against this motion as it stands. What you're suggesting, Brian, is radical. It's not just a tweak; it's a different perspective, which I'm more open to.